We met at Michael's in New York after the publication of Panderer to Power: The
Untold Story of How Alan Greenspan Enriched Wall Street and Left a Legacy
of Recession. "I really enjoyed your book," were his first words. This
was gratifying, since the number who have read the book is probably in double-digits.

Ted was a former friend of Alan Greenspan's, so, it was especially nice to
hear, "You were very fair to him." I told him this was not difficult since
Greenspan's own words condemned his Federal Reserve chairmanship. Recording
his life and statements before 1987 (the year he became Fed chairman) was evidence
enough that he lacked personal character to a sufficient degree for the Wise
Men to satisfactorily conclude Alan Greenspan would act as expected. I went
out of my way to suggest higher motivations for Greenspan's blemishes, allowing
the reader to decide in which direction the evidence fell.

In Ted's opinion: "His own words showed how confused he was."

Ted thought my chapters about the 1980s were accurate. This was received with
some relief. Few played a more central role than Ted, during the period I proposed
(in Panderer to Power) as the sharp break in American finance. In particular,
1984 to 1986 was the time when Wall Street corruption was institutionalized.
Alan Greenspan's participation in the S&L swindle (in 1984 and 1985) was
akin to a Triple-A, minor-league, first baseman batting .360: the consulting
economist was major-league material.

(From a letter written by New York Senator Daniel Patrick Moynihan on August
15, 1990: "Consider the Financial Institutions Reform, Recovery, and Enforcement
Act (FIRREA) more commonly known as the 'S&L bailout bill.' Has there ever
been an equivalent phantasmagoria of evasion, avoidance, incompetence, muddle,
and panic, all with the nice overlay of swindle? From a Treasury Department
once handled by Alexander Hamilton! The largest scandal in the history of the
national government; for which no one is responsible. That being the first
sign of a government whose true energies and talents are directed elsewhere.")

There were more pages in Panderer to Power about the 1980s than some
wished. Yet, the times and the man were Siamese twins. A grounding in that
period is a foundation to understanding the final and accelerating finish of
venerated U.S. institutions today: financial, academic, media, and government.

Without saying it should be so (to the best of my recollection), Ted supported
my conclusion that Too-Big-To-Fail banks should be shut. He didn't know his
banker anymore: "I don't know what a bank is. I've been doing this for 30 years.
I went for a loan for one of my companies recently. The room was filled and
I couldn't figure out if there was a person, a banker, who decided [whether
I would get] the loan. None of them knew who I was."

Ted did not think derivatives should exist "except to hedge gold, crops [or
similar physical materials]."

I had not known, until reading the New York Times obituary, that Ted
Forstmann "coined, if inadvertently, a phrase that set the public image of
the leveraged buyout industry. While he was golfing in the late 1980s with
Richard L. Gelb, then the chairman of Bristol Myers, the discussion turned
to a surge in takeovers by buyout firms. 'What does it all mean?' Mr. Gelb
asked Mr. Forstmann. 'It means the barbarians are at the gate,' Mr. Forstmann
replied. 'And they'll be coming for you next.'"

The obituary quoted from a Wall Street Journal column that Ted wrote
in 1988: "Watching these deals get done is like watching a herd of drunk drivers
take to the highway on New Year's Eve."

I graduated from business school in 1985 and played a bit part in the leveraged
buyout spectacle. As a bit player though, with investment bankers grasping
for every company's business (even to the unlikely degree of wooing a very
junior analyst), I knew the gossip. Ted Forstmann was in the thick of deal-making
at that point (Forstmann, Little), but his name was above reproach.

Ted thought younger people today combine a strange mix of materiality and
immateriality. People he talked to in their 30s or 40s wanted to make money.
They didn't really care about producing or making something.

Ted thought Alan Greenspan, via the Federal Reserve, was the central spigot
of our current plight. In Ted's words: "They print the money. When they print
too much, it goes into activities that aren't economic. When the interest rate
is too low, people aren't careful. Borrowers can pay back in depreciated dollars.
They barely need to put any of their own money into a project. If interest
rates are 7%, they need to calculate its potential profitability."

Ted recommended Nicole Gelinas's book: After the Fall: Saving Capitalism
from Washington and Wall Street. He thought she successfully made the
case we did not need a slew of new financial regulations. If the Federal
Reserve and other regulators had enforced the rules then in place, there
would not have been a financial crisis. These are wise conclusions that could
never penetrate the interests in Washington, Wall Street, academia, and the
media. For each of these parties, such an acknowledgement would reveal their
failure to halt the obvious beforehand. (See Moynihan, 1990, above.)

I presumed Ted did not think Federal Reserve Chairman Ben Bernanke was an
improvement. Whenever his name was mentioned, Ted either winced as if he had
bitten into a lemon or exhaled a low moan.

Ted was disappointed, but maybe not surprised, that I saw no other solution
than to let prices, including assets and incomes, settle at a lower level,
at which point the U.S. will be competitive again. This may have been a reason
he simply could not speak at the mention of Ben Bernanke's name.

Sheehan serves as an advisor to investment firms and endowments. He is the
former Director of Asset Allocation Services at John Hancock Financial Services
where he set investment policy and asset allocation for institutional pension
plans. For more than a decade, Sheehan wrote the monthly "Market Outlook" and
quarterly "Market Review" for John Hancock clients.

Sheehan earned an MBA from Columbia Business School and a BS from the U.S.
Naval Academy. He is a Chartered Financial Analyst.